Dollar General Hits 10,000

On March 22, Dollar General issued a press release announcing its financial results for the recently completed fiscal year. The monetary statistics were impressive indeed as net sales for the fourth quarter increased 20.1 percent over the previous year’s last quarter. Net sales for the fiscal year ending February 3, had increased 13.6 percent over sales from the prior year.

Perhaps even more telling of the company’s picture of health was that these numbers while robust were not all that shocking. To anyone following Dollar General’s aggressive store expansion pattern over the past few years these financials would appear to be the final validation that the company is giving its customers, as well as consumers who reside in areas yet to meet the Dollar General blitz, what they clamor for.

While the company’s statistical success might seem stunning in terms of dollars, another noteworthy number stood out on that press release. As of February 3, 2012, Dollar General was operating 9,937 stores. To put this into context, in the company’s annual financials press release one year earlier, the company declared that it was operating 9,372 locations. The company has reported a net addition of 565 stores during a year in which our national economic and political debates hover around the question of just how strong or weak our recovery has been from our greatest economic setback since the Great Depression.

What brings these numbers to mind is a Dollar General press release dated March 30. Here the company proudly announced the opening of its 10,000th store. In less than two months since its fiscal year end the retailer had added sixty three locations to reach the 10,000 store mark. While the company was proud to acknowledge reaching this milestone, a side note in the press release should not go overlooked. It happens that the landmark 10,000th location is in Merced,Calif., which is one of the company’s first stores to open in that recently entered state. Thus the retailer reached another milestone by achieving a coast-to-coast presence for the first time in the company’s history.

It seems that over the past few years there has been a progressively increasing acknowledgement of the growing success of dollar retailing and a greater scrutiny of the reasons behind that market’s considerable growth at a time when most businesses are gasping for acceptable financials each quarter. In previous Chain Store Guide Insights we have documented the factors behind the rise of the dollar store segment years prior to the recession and especially during the early stages of the recession.

Dollar General was particularly savvy in quickly analyzing local and regional real estate markets, many of which were in economically challenged areas, suddenly depressed and replete with bargains. This was especially true in markets in which dollar stores are traditionally strong. Understanding its then current customer base and allowing for the needs of atypical demographic groups, as many consumers were stunned by a new economic reality and sudden economic strife, Dollar General quickly decided to invest in a prudent expansion that gained the company very undervalued real estate in communities craving value shopping.

Aggressively adding grocery SKUs, especially in perishables, gave customers incentives for more frequent store visits and has resulted in greater spending on a per visit basis. As more stores opened within communities particularly stressed by the economy, customers welcomed the neighborhood store visit which in addition to saving on basics and groceries resulted in savings on transportation. Now as the price of gas continues to rapidly rise both in price and the ability to create political headlines, the dollar store recessionary expansion strategy increasingly pays dividends and seems like a work of genius. So much so that Walmart initiated its Walmart Express concept as a Johnny-come-lately, in hopes of capturing a bit of the success experienced by dollar stores.

Chain Store Guide’s database of Discount Stores &Specialty Retailers shows how Dollar General has grown since the recession was finally declared. As of February, 2008 the company reported 8,194 locations. Within a year it had sealed its plans for expansion that would have seemed bold at any time. But this was a year when the banking system was largely in chaos, Wall Street was begging for help and Detroit feared not just losing dominance in the auto industry but of losing its once dominant manufacturers forever. In this time Dollar General merely grew its store count by just over twenty two percent and expects to open 625 locations this year, with a part of that planned for its entry into our biggest stateCalifornia, making it a coast-to-coast success.

Arthur has worked at Chain Store Guide for 20 years. He received a B.A. degree from City College of New York and attained a master’s degree in electronic communications from Brooklyn College. Please contact him if you have any questions or comments.